Property insurance covering loss or failure of satellites has existed for more than forty years. This insurance is first party property insurance to compensate the owner of a satellite in the event of the total or partial loss of its satellite either as a result of a failure at launch or during the in-orbit lifetime of the satellite. This insurance customarily covered the capital cost of the satellite, the price of the launch services (in the case of launch insurance) and the cost of the premium, usually on an agreed value basis (in the case of launch insurance) or based on the declining net book value of the satellite (in the case of in-orbit insurance). At one time in the past, this insurance included a component of business interruption loss and extra expenses incurred in securing replacement capacity or modifying ground equipment to accommodate satellite deficiencies. This insurance has been underwritten traditionally by a specialist property insurance market.
More recently, coverage has been placed on a one-off basis by a single bondholder in a satellite project on an agreed value basis, rated and with coverage terms substantially equivalent to satellite operator property launch insurance. However, the terms of the policy, method of placement and other details of the process for issue of the policy differ significantly from the terms, method of placement and other details described herein.
Equity shareholders and bondholders in publicly and privately traded securities of satellite operators still remain unprotected from the possible drastic diminution in value of their securities resulting from the loss or failure of satellites owned by the satellite operators in which they have invested. This is because of the significant cost of procuring a separate policy of insurance rated on the same basis as the property insurance of the satellite operator, for relatively small amounts of insurance on an agreed value basis, whereas the rating should more properly be determined based on the likely diminution in value of the securities (versus the loss of the satellite) based on historical experience and for the actual diminution in value of the securities versus an agreed value that may have no bearing on the actual loss suffered.
The preceding description is not to be construed as an admission that any of the description is prior art relative to the present invention.